EU One Step Closer to Labeling Nuclear, Gas as Sustainable

The European Parliament approved the EU rules labeling nuclear and natural gas plants as sustainable. The bill has caused some rifts among members over how to fight climate change. The vote paves the way for the European Union proposal to pass into law, unless 20 of the bloc’s 27 member states decide to oppose the move, which is seen as very unlikely.

If the new rules become law, gas and nuclear plants will be added into the EU Taxonomy rulebook from 2023. It will enable investors to label and market investment in them as green.

Out of 639 lawmakers, the rules saw 328 in opposition to block the proposals.

The European Commission, which proposed the rules in February, welcomed the result. The proposal came after more than a year of delay and intense lobbying efforts from governments and industries.

The rules have split EU countries, lawmakers and investors, and forced Brussels to redraft the rules multiple times. Its final proposal has caused debate over how to reach climate targets amid dwindling Russian gas supplies.

Some EU member states have been supporting the inclusion of gas, which is a fossil fuel but produces far less emissions than coal, as a temporary alternative to replace the dirtier fuel.

France leads the supporters of nuclear energy’s inclusion. Nuclear is free from CO2 emissions but produces radioactive waste. France says nuclear is vital to meet emissions-cutting goals, while opponents, including Germany, cite concerns about waste disposal.

Luxembourg and Austria, which oppose nuclear power and have warned against labelling gas as green, said they would challenge the law in court.

Opposers say this is a wrong signal by the EU to the rest of the world that would undermine the bloc’s leadership position on climate action.

The EU taxonomy aims to put clear guidelines to sustainable investing, by ensuring any financial products making eco-friendly claims meet certain standards. Gas plants, for example, must switch to low-carbon gases by 2035 and meet an emissions limit.

How the law will impact investing trends is yet to be seen. The taxonomy does not prohibit investments in activities without the green label.

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